Attemptsi 4. Profit maximization in the cost curve diagram Supoose that the mark

Q: Attemptsi 4. Profit maximization in the cost curve diagram Supoose that the mark

In the short run, at a market price of $25 per microwave, this firm will choose to produce 30 microwaves per day. This is becuase, at price $25, it cuts the MC at a point where quantity is 30. But below that price firm will stop producing, as it is less than minimum average variable cost. Until market price is equal to AVC or higher than AVC, the firm will continue producing.

ID: 1124305 • Letter: A

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Attemptsi 4. Profit maximization in the cost curve diagram Supoose that the market for microwave ovens is a perfectly competitive market. The following graph shows the daly cost curves of a firm operatieg in Keep the Highest:3 this market Profit or Loss In the short run, at a market price of $35 par mirowave, this fr wil choose to produce microwaves per day. On the preveous graph, use the blve rectangle (cihale symbos) to shade the area represending the m's profit or oss id the market pce is 35 and else can know

Explanation / Answer

In the short run, at a market price of $25 per microwave, this firm will choose to produce 30 microwaves per day.

This is becuase, at price $25, it cuts the MC at a point where quantity is 30. But below that price firm will stop producing, as it is less than minimum average variable cost. Until market price is equal to AVC or higher than AVC, the firm will continue producing.

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Attemptsi 4. Profit maximization in the cost curve diagram Supoose that the mark

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